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Russian Consumers’ Credit Health Drops to New Low, According to FICO and NBKI Data Print E-mail
Wednesday, 27 August 2014

FICO, a leading predictive analytics and decision management software company, and the National Bureau of Credit Histories (NBKI), Russia’s leading credit bureau, today announced that Russian borrowers’ credit health fell again in recent months. As of July 1, 2014, the FICO® Credit Health Index had reached 98 points, the lowest level since the Index was initiated in 2008. The previous low point (100 points) was initiated in July 2009.

The FICO Credit Health Index measures Russia’s overall credit health, based on the percentage of consumer loans and credit cards reported to NBKI as delinquent by more than 60 days. In July 2014, 12.2 percent of Russian credit accounts were delinquent, compared with 10.07 percent in January 2014, and just 7.05 percent in January 2012, when the index reached its highest point.

"The index is based on the share of ‘bad’ debts,” said Alexander Vikulin, CEO of NBKI. “The growth rate of new loans is declining, and delinquencies in unsecured credit are growing because of rapid development of retail lending in previous years. That's why the share of bad debts is inevitably increasing. Nevertheless, we see that the quality of new loans is high, based on the repayment patterns, so we expect that the index will increase bit by bit."

Since January, Severo-Kavkazskii region experienced the largest Index drop (27 points), while Centralnyi experiencing the smallest drop (13 points). The regions Centralnyi (index 102), Severo-Zapadnyi (index 101) and Privoljskii (index 100) were the only regions outperforming the total population index in July.

"The largest share of troubled debt in banks’ portfolios came from the intensive development of the unsecured lending market," said Evgeni Shtemanetyan, who directs FICO’s operations in Russia. "Lenders should focus on improving the performance of existing customers and implementing more intelligent risk management systems. FICO has seen growing interest from Russian banks in modernizing their risk management tools and decision-making systems at all stages of the credit lifecycle.”

 

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